Author: Anu Heda

A Different Way to Filter Mutual Funds Online

Posted by Anu Heda on Jun 23, 2015, in Thoughts

Many of our digital strategy engagements include a competitive analysis. Though we comprehensively cover the best practices for all components of asset managers’ Web sites, we often linger on mutual fund filtering. By filtering, we mean the interaction between user (typically financial advisor) and Web site to show a small set of relevant funds. Any manager with more than fifteen funds (less than that, you could just show a list) has to consider filtering. Clients often point to the J.P. Morgan filter as a favored practice.

I tend to agree, especially with the quick access to 4 & 5 star funds. Yet, I’ve been mulling a different approach to filtering.

The approach I’m thinking of is more akin to Starbucks coffee bean sales. As best I can tell, Starbucks has over 34 unique coffees. Starbucks walks you through a 3-question process to understand preference. After answering the questions, you receive a recommended coffee (for me it’s the Veranda Blend) with a few secondary recommendations. That’s similar to the emerging robo-advisors’ approach from companies likeBetterment and Personal Capital. The robo-advisors use 5 or 6 questions, and after answering all them you receive an asset allocation model. What if the approach more closely mimicked the Starbucks coffee finder or robo-advisor asset allocation analyzer?  This sequential question approach has at least three advantages:

  1. Simple and straightforward
  2. Responds well on all devices (often those little filter buttons typical to asset management Web sites are difficult to toggle on my phone)
  3. Great analytics related to fund (broadly asset class) interest

These advantages cost internal time and resources. Most likely a cross-functional team (Marketing, Product, and Sales) needs to convene to develop/scrutinize the questions as well as develop the fund mapping. Given the potential benefits, this seems like an approach worth considering.

Best Blogs of the Week vol 190

Posted by Anu Heda on Jun 22, 2015, in Best Blogs of the Week , tagged with , , ,

We cover five posts this week, three (fixed income transparency, LDI within DB plans, and taxes on international investing) posts offer in-depth analysis on topics rarely covered by the industry’s blogs. We also welcome Lord Abbett. First time one of their posts made the cut.

Bonds: Is More Transparency Better? –Lord Abbett

“… TRACE may be leading to a reduction in liquidity in the corporate bond markets.”

Sortino Ratios Measure Risk the Way Investors Do –Oppenheimer (Sortino Ratio Revealed!)

“This tool – the Sortino ratio – addresses one of the limitations of the Sharpe ratio and looks at the returns that investments deliver only in relation to their volatility during down markets.”

Data in China Points to a Significant Slowdown –Oppenheimer (Chinese Economy Slowdown … in charts!)

“Looking at the Chinese data from these two perspectives provides a stark reminder of how severe the slowdown is.”

International investing doesn’t have to be a tax burden –Russell

“The real reason international equities are typically tax inefficient is due to poor tax management by money managers.”

Surprise ingredient for an LDI recipe: A pinch of global min vol—as an equity suballocation? –Vanguard (Volatility Consideration for Large DB Plans)

“For all but frozen plans near termination, we advise a return-seeking and a liability-hedging asset allocation.”

Advancing Product to Product Sharing

Posted by Anu Heda on Jun 17, 2015, in Thoughts

We spend a fair amount of time reviewing industry Web sites and investigating specific features. Somewhat nerdy, I know, yet after 15 minutes of poking around, I always come away with a strong opinion or two. Last week I noticed that American Funds integrated multiple products directly into fund profiles. And not via some right-hand rail “See these funds” section. No, right into a risk-return chart!

Imagine you’re a financial advisor reviewing the data on The Growth Fund of America today (which I imagine thousands of FAs are actually doing) and you scroll down to the “Volatility & Return” section. You’ll see the chart below. The small grey circles represent other mutual funds. So for an FA seeking a fund with a different risk/return profile, there’s an opportunity (in-line with Growth Fund of America) to fine one. It would be fantastic if a mouseover-plus-click moved the FA over to the highlighted fund. Nonetheless, this is an innovative technique to display fund information relative to other American Funds’ mutual funds.

 

Best Blogs of the Week vol 189

Posted by Anu Heda on Jun 15, 2015, in Best Blogs of the Week

Just two posts this week of note.
Diversification: A better way to avoid portfolio gridlock  –Invesco [excellent asset class chart]

“A well-diversified portfolio should include a mix of assets that perform differently in various economic environments — that way, investors are ready for what may come”

Unconstrained ≠ Undisciplined Bond Investing –Wisdom Tree

“To WisdomTree, an unconstrained fixed income strategy allows an investment manager increased flexibility to generate total returns and manage risk compared to an index-based approach.”

Best Blogs of the Week vol 188

Posted by Anu Heda on Jun 08, 2015, in Best Blogs of the Week , tagged with , ,

All three posts this week have an international bend to them.

Yuan Taking Over –BlackRock

“… over the past 18 months, we’ve seen more of a two-way market. Investors should expect this to continue, as there are contrasting factors impacting the currency.”

A Bad Bond Proposition –M&G

“Few bond market offerings tick all the boxes, but if we are to be suitably compensated, and subject to certain red lines, we are generally sanguine.”

International Investing –WisdomTree

“if there is little to no expected return, but an additional source of volatility, why layer currency exposure on top of international equity exposure?”